Jack in the Box Inc. Announces New Strategic Plan

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Citing new growth opportunities and capitalizing on consumer trends, Jack in the Box Inc. (NYSE: JBX - News), operator and franchiser of Jack in the Box® restaurants, today announced a new strategic plan centered on product innovation and multiple growth strategies to develop the regional chain into a national restaurant company.

"In the last few years, we have focused on building our brand, enhancing food quality, and promoting a core group of products while growing the chain primarily with company-operated restaurants," said Chairman and CEO Robert J. Nugent. "As a result, since 1998, we have increased our market share by 25 percent.

"But today's environment presents new challenges and opportunities that require a fresh approach to satisfying consumer demands and expanding our company's size and value. We expect this plan to build on our strengths and renew our momentum and help us grow more profitably over the long-term," he explained. Following are highlights of the plan, which was recently approved by the company's Board of Directors:

Sales and Profitability

A focus on new product innovation to further differentiate the company from QSR competitors, with a more relevant menu that includes lighter fare and additional quality enhancements to current product lines. Supporting this effort will be a new, 70,000 sq. ft. Innovation Center, scheduled to open in 2004, that will house a R&D kitchen, quality assurance lab, consumer research facility and marketing organization.

Enhancement of the guest experience through continued speed-of-service improvements, and additional investments in interior design and exterior remodels.

Multiple restaurant prototypes that reduce development costs, improve unit economics and can be used in a greater variety of sites.

Continuation of the Profit Improvement Program to increase margins and returns.

Targeted annual earnings per share growth of 10-15 percent.

Multifaceted Growth

Continuing its core growth strategy, the company plans to increase the number of company restaurants by approximately 5-7 percent a year. Over the next five years, about 20-25 percent will be the Jack in the Box C-Stores, which co-brand a Jack in the Box restaurant with a convenience store and gas station. This expanding concept offers several benefits, such as additional sites, additional sources of profits and cash flows, and operating similarities with the core business.

Continue to build new units in the Southeast while strengthening the brand there, and prepare the company for further new-market expansion.

Convert about 25 percent of existing company restaurants to franchises, and add approximately 200 new franchise restaurants through the sale of development agreements. The franchising plan will reduce the ratio of company-to-franchised units from 80/20 today to approximately 65/35 in five years. At this rate, the company expects to be able to maximize the gains from franchise conversions.

Actively evaluate for acquisition other restaurant concepts to supplement the company's core growth and balance the risk associated with growing solely in the highly competitive quick-serve segment of the restaurant industry.

Nugent commented that, "By strengthening the Jack in the Box brand and pursuing growth with more flexible options, the company can better position itself as an increasingly profitable restaurant company. Many of the fundamentals of our business will remain, but we believe that our new strategic plan will make us more competitive in a changing and more challenging environment."

As another element of its plan, the company will continue to re-purchase shares of Jack in the Box stock, following recent approval by the Board of Directors of an additional $50 million for the company's stock re-purchase program. The program, contingent upon bank authorization, reflects management's confidence in the strategic plan and is intended to offset ongoing dilution from the exercise of vested stock options.

In addition to announcing its new strategic plan, the company also provided its initial earnings guidance for fiscal 2003, stating that it expects to earn, on an as-reported basis, approximately $2.46 per diluted share versus $2.06 per share estimated in fiscal 2002.

The company expects to earn approximately $2.46 per diluted share versus $2.24 per share in fiscal 2002, after adjusting fiscal 2002 for: the adoption of FAS 142 in the first quarter of 2003, conforming the company's income tax rate to the 2003 estimated rate of 38 percent, and excluding fourth quarter 2002 estimated one-time charges for a litigation settlement and store closures.

Other key figures provided:

System-wide sales of approximately $2.42 billion compared with an estimated $2.24 billion in FY 2002, an increase of 8 percent.

Total revenues of approximately $2.13 billion, 8.7 percent higher than the prior year's estimated $1.96 billion.

Gross profit rate of approximately 19.9 percent of revenue compared with 19.4 percent of revenue in FY 2002.

Net earnings of approximately $98.6 million compared with approximately $82.7 million in the prior year. Excluding the one-time charges and adjusting for the adoption of FAS 142, net earnings in the prior year would be approximately $89.8 million, for a year-to-year increase of 9.8 percent.

Founded in 1951, Jack in the Box is among the nation's leading fast-food hamburger chains. The company operates or franchises more than 1,850 quick-serve restaurants in 17 states.